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February 26th 2013 print

Peter Smith

For the left, only myths and monsters remain

With neither principles nor record worth the effort of defending, the left loses itself in class-war mythology and Keynesian incantations

What exactly do you do when there is nothing ‘Left’ to stand for, apart from snaffling the fruits of office? Why not confect an absurd and timeworn battle between workers and bosses?

Paul Howes the Australian Workers’ Union national secretary is just 31 years of age. It shows. We all said silly things in our early thirties, playing to whatever was the gallery at the time. So when he referred to mining executives as "corporate robber barons in their shiny suits" at the recent AWU national conference, maybe we should give him some slack and put it down to a bout of youthful silliness and exuberance when playing to a group of union delegates caught in a time warp.

On the other hand, callow or not, he occupies an exalted a position in the union movement and had sufficient clout in 2010, when younger still, to be a central figure in getting rid of Rudd. How such a thing could happen is a mystery of Labor Party politics known only to movers and shakers behind closed doors. Has anything much changed since Whitlam and Calwell were kept waiting by a lamppost by the ‘faceless men’ in 1963. Well, yes, it has. The world has changed; though you wouldn’t know it if you took a peek at union delegates and the Prime Minister singing Solidarity Forever.

“Corporate robber barons” — is Howes for real? Is he talking about the same group of people charged with improving returns for union members, who collectively have billions of dollars of superannuation funds at stake? But leaving that aside, the narrative was always nonsense.

In some convoluted fashion it could only have been based on those so-called robber barons cruelly and capriciously keeping secret stashes of goods away from the workers. It is a struggle to understand how this narrative ever gained legs, even in the more impoverished past. Now, surely, only the dim-witted and gullible swallow it.

Capitalism with all of its faults and imperfections creates a community of interest between those who run companies and those who work for those same companies. The transparency of modern life has stripped away the mystique of corporate life. Workers now all know, or should, that they will be sacked unless competitive profits are made. And this is quite apart from the fact that these days workers are also often part owners.

The Labor Party and parties like it are bereft of meaningful causes. They used to have a plausible, if false, rationale. They now have nothing. So the faithful stick to the increasingly ridiculous and timeworn narrative about workers versus robber barons; and, to stuff their kit bag, they have adopted Keynesian economics as a makeshift ‘scientific’ crutch.

Keynesian economics has nothing to do with politics per se. It is a disproven economic theory stemming from the work of John Maynard Keynes in 1936. If it had validity the gross government overspending in Japan, in Europe and in the United States would have produced economic buoyancy, not economic stagnation and misery. Be that as it may, by promoting a role for government in saving us all from capitalism, it has been latched onto by the Left as part of their hollow offering.

It wasn’t surprising, therefore, to find Wayne Swan at the G20 Summit in Moscow lecturing participants on the virtue of even more debt-financed public spending to spur economic growth. Swan is admittedly an expert on debt-financed public spending, having frittered away the frugal legacy he was left by Howard and Costello. He is so good at it that even when he specifically and persistently aims to achieve a surplus, lo and behold, he pulls a deficit rabbit out of the hat.

Whether those at the G20 representing countries with debt close to, at, or well over, 100 per cent of their GDP were impressed by Swan’s advocacy I don’t know. I would suspect that the niceties of diplomacy would have prevented them from taking particular issue.

It wouldn’t really matter what anybody said or didn’t say. Swan’s worldview, and the worldview of those like him, is impervious to facts and evidence. If government spending and debt is followed by economic stagnation, more government spending and debt is called for.

Apparently, the strictures that apply to over-spending and debt-ridden companies and individuals do not apply to government. Why is that, you might ask incredulously? The only answer is to refer to a branch of mythology called Keynesian economics. It is fitting that those who still think that a tug-of-war between bosses and workers defines the political divide also believe in economic mythology.

Peter Smith, a frequent Quadrant Online contributor, is the author of Bad Economics

Peter Smith, a frequent Quadrant Online contributor, is the author of Bad Economics